Midlantic, on the mend, revitalizes its retail side.

After years of neglecting its retail business, Midlantic Corp. is again wooing branch customers with new products, better service, and more aggressive marketing.

The efforts, begun last year, appear to be paying off. In the first six months of 1993, consumer loans at Midlantic grew by more than $400 million. In that same period, more than 60,000 customers signed up with Midlantic for a new relationship checking account.

The renewed focus on retail banking has been a linchpin in returning New Jersey's second-largest bank company to health, according to Alan M. Silberstein, who heads the consumer businesses.

"We have an enormous franchise and a good customer base, and we weren't taking advantage of it." said Mr. Silberstein, an executive vice president who joined Midlantic in 1992.

Lured from Chemical

Mr. Silberstein, an 18-year veteran of Chemical Banking Corp., was running the money-center's retail branch system in New York City when he was recruited by Midlantic chairman Garr\ J. Scheuring.

Mr. Scheuring, a former vice chairman of Chicago's Continental Bank Corp., was himself recruited to revive the Edison, N.J.-based company in 1991.

Problem realty loans had devastated Midlantic to such an extent by 1990 that most observers were predicting its demise. During the crisis years, little attention was paid to building the consumer business, which had always taken a back seat to middle-market lending.

But Midlantic, with $13.8 billion in assets and $11.8 billion in deposits, is now on the mend. Mr. Scheuring has aggressively sold nonperforming loans, slashed costs, sold subsidiaries, and rebuilt core businesses.

Profits soared to $64 million in the first half of the year, compared with a loss of $21 million for the same period in 1992.

Retail banking throughout the New Jersey bank's 330-branch network has played a key role in the comeback. Midlantic reported $2.1 billion of consumer loans on June 30, or 25% of Midlantic's total loan portfolio - up from 18% at yearend 1992.

New home-equity loans accounted for half of the total $400 million increase - the fruits an aggressive marketing program that included in-branch promotions and newspaper ads.

Midlantic, of course, is not the only New Jersey bank pushing consumer lending. But its program appears to be more successful than those of its rivals.

Weak Rise at UJB

UJB Financial Corp., a Princeton-based banking company with $13.5 billion in assets and 259 branches, saw consumer loans rise just 1.3% to $2.02 billion in the first half of 1993.

First Fidelity Bancorp., New Jersey's largest bank with $32.3 billion in assets and 367 branches in the state, saw consumer loans rise $32 million, or 4%. to $4.8 billion.

Midlantic is also concentrating on noncredit consumer products. Under Mr. Silberstein's direction, it has been one of the first banks in the Garden State to offer a relationship banking account. Since launching the program earlier this year, the bank has opened more than 60,000 accounts.

Service Charges Up Smartly

The new deposit accounts brought an added fee bonus: Service charges at Midlantic during the second quarter rose 11% over the first quarter to $20 million.

Mr. Silberstein attributes much of his success to his program to improve customer service, an area that had been gravely neglected during the bank's problem years. As part of a cost-cutting program that slashed 2,000 positions last year. branches were heavily restaffed.

Employees who had marketing experience were given managerial positions. with instructions to instill a sales culture among their staff. Sales tracking and incentive compensation programs also were introduced.

Mr. Silberstein oversaw the introduction of a 24-hour customer service telephone line and an automated credit application processing system. The computerized system has dramatically accelerated credit application and approval times, the executive said.

By the end of this year's first quarter, the most recent period for which data were available, Midlantic had at least one relationship with 16.5% of New Jersey households. That compares with 24% in the northern part of the state and 21% in the south for First Fidelity which has the dominant share of consumer deposits in New Jersey.

While Mr. Silberstein acknowledges First Fidelity's statewide strength, he believes Midlantic can eat away at its lead through quality service and marketing.

"Everyone [at Midlantic] is working harder than they were two years ago." he says.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER